Partnering w/a Fortune 500 Can Solve 107% of your Problems
(if you want me to elaborate on detailed topics such as getting debt / credit insurance out of a F500 sales relationship, just press 'Reply' and tell me what else you'd like me to cover)
When VC dollars look like this…
…you need a damn good story if you wanna cut through the noise.
A kick-ass strategic partnership can be just that.
So today I’m going to show you how to identify & get going, because…
The right strategic partnership can put your company on a totally different plane of existence.
Unfortunately, most founders don’t know how to get one done, and done RIGHT.
We’re gonna fix that.
So here’s what we’re going to cover:
- 💰 Why they’re valuable to you
- 🔎 How to find a strategic partner (+what it looks like when done well)
- 💼 What to negotiate for
- ⚠️ What to watch out for
Here’s how, step by step:
Step 1: Decide why you’re doing it
Easiest way to think about this = ask “What’s in it for me?”
Everyone wants to hook up with a Fortune 500. That’s normal.
The only way you’re getting a deal done though, is if you justify value on both sides.
You have something they want, and they have something you want.
We’ll start with…
What you want
There’s a million reasons why, but only a few that actually matter enough to do a deal:
- Distribution: One-to-many channel distribution could be the difference between bootstrapping and your next 2-3 years of ARR growth after a successful round
- Market Validation: Tremendous credibility in customers’ eyes. F500 has it; you don’t
- Maybe Money?: Potential investment if they have a CVC arm
- Development Resources: That new tech you’re developing? They probably have teams of people they could lend you
- Customer Experience: F500 could be an expert on the problem you’re trying to solve, and wants to be your pilot customer
Now let’s talk about…
What they want
Fortune 500 ain’t gonna do a deal with you for no reason.
You better have something they want too:
- New Tech / IP: This could be a couple of things…
- An edge over their competitors
- Solving for an IP cliff they’re about to hit
- Update of old systems
- Product They Can Cross-Sell / Distribute: They have a massive distribution arm with worldwide customer relationships, and could sell your product all over to existing customers alongside their own
- Stake in a Fast-Growing Niche: They want exposure to it; you’re already in it
- Speed to Market: F500s are great at deploying enterprise-grade solutions, but not in doing it quickly as a startup can
It’s a simple equation: you give them A, they get B in exchange.
Do the deal, and it could mean a step-change in your company’s value - especially **in investors’ eyes.
Step 2: Track down your strategic partner
I’ll probably do a totally separate post on investor skip-tracing soon enough.
For now, do this:
- Find: Pick the company you want to partner with
- Narrow it down: Go through their website, especially their management team page
- Google “[F500 Name] venture arm” A lot of them have one. There should be a contact person there, or submission pathway etc. That’s another way in.
- Find Corporate / Strategic Partnerships section / logos. Google for press releases about corporate / strategic partnerships they’ve done in the past. Note down who from the F500 was quoted in the release. You’re looking for the Head of Corporate Partnerships, potentially in your sector if there are several.
- Contact: Send a LinkedIn request to that person with a custom message (You must pass the Turing Test). If no response, use Hunter.io or similar & email them a few days later
I have several founders who have run this strategy very successfully. A few examples:
- Distribution: Greentech working with Black & Veatch. They started by doing a distribution deal, and built up from there
- Distribution: Proptech partnered with Deloitte Consulting RE group, who now sells their tech on all their deployments
- Tech + Distribution: Tech-driven consumer did distribution deal w/multibillion NYSE player with 2K retail locations
- Distribution + CVC $$$: Proptech partnered with JLL + CVC investment from JLL Spark
- New Tech Fixing Something Broken → Monopoly Position: Edtech w/exclusive partnership with key industry group locking in a competitive position
Step 3: Work out a deal
What to look for:
- Enterprise-level company serving your ideal customer base
- …that doesn’t directly compete with you
- …but where your product could be complimentary / easily cross-sold or upsold to partner’s customer base
- Bonus: if they have an Innovation Program, CVC or track record of investing in startups
Warning: Investors love strategic partner deals. Could open up a superhighway of future revenue growth.
But it’s not easy.
You’re not in control of timelines, can be slow-burning, time-consuming to go through bureaucratic enterprise approvals & potential tech integration hurdles.
About the Money
Strategic Partnership is your #1 priority, so don’t seek capital directly from potential partner off the bat.
If it’s on the table, don’t worry, it’ll naturally come up in the context of discussions.
But strategic partner deals turn into investment more frequently than you might think - especially if your partner has a Corporate VC arm.
Having that partnership in the bag will boost your attractiveness as a whole toward outside investors (incl. VCs), and even moreso if the CVC is cutting a check too
Step 4: Don’t get screwed
Watch out for:
- Cultural fit issues. Could slow you down, or potentially turn into “the partnership from hell.” Vet potential partners more than potential hires - after all, they’ll be around longer
- Reputational stigma. Could open one big door, but close several others, e.g. The Kick.com effect: partnering with Gambling platform brings $$$, but could stop you from doing business with reputable partners
- Giving too much away on…
- Terms: if doing the partnership means you won’t be able to sell profitably / unit economics will be upside down, might be best to walk & find a better partner
- Equity: you need to make sure that having a CVC on your cap table won’t stop you from doing business with competitors down the line (or, if you’re lucky, selling your company to them!)
Summary
Remember:
it’s up to YOU to drive the relationship.
YOU gotta find the value & show how they win
YOU gotta craft a deal
…and YOU gotta make sure you’re not getting yourself into a bad deal.
Don’t screw this up.
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